Tax Calculation with Three Tax Brackets

Taxable income
Lower Income threshold for bracket 2
Lower Income threshold for bracket 3
Income tax rate for bracket 2
Income tax rate for bracket 3
Income tax

$120,000
$40,000
$100,000
20%
25%
$17,000

Tax Calculation with Three Tax Brackets Using Cell Names

Taxable income
Lower Income threshold for bracket 2
Lower Income threshold for bracket 3
Income tax rate for bracket 2
Income tax rate for bracket 3
Income tax

$120,000
$40,000
$100,000
20%
25%
$17,000

<== Income
<== Thresh2
<== Thresh3
<== Rate2
<== Rate3

Decision Tree for Calculating Income Tax with Three Tax Brackets

Yes

Tax = 0

income <= thresh2?

Yes
No

income <= thresh3?

No

Tax = rate2* income over thresh2

Tax= (rate2* thresh3 less thresh2) + (rate3*income over
thresh3)